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Tidal, Apple, Beyonce, and the Future of Streaming Music

Jay Z and a bunch of his big time friends in the music business held a press conference this week to re-launch Tidal, a music treamervice he recently acquired. Let’s use that event as an excuse to reassess the state of online music. Here are eleven steps to the future of online music.

1. Before Jay Z bought it, Tidal’s claim to fame was that it was one of two music services (along with Deezer) that have focused on the American audiophile crowd. The idea is that you get access to streams of higher quality files that make it sound more like you’re listening to a CD. I’m not knocking it this idea. I recently had a serious midlife crisis that manifested itself as a need to learn about and purchase anything that would improve my listening experience. But here’s the thing…

2. As long as you’re listening to music via your headphone jack (going out to your headphones or out to some external powered speakers), that extra file size and music quality will not make a difference. Zilch. I used to be a Tidal customer. One night I gathered about 8 people and let them listen to tracks from both Rdio and Tidal. Not one person picked the Tidal track as superior. That surprised me. But it shouldn’t have. Here’s why…

3. Every laptop and smartphone has something called a DAC (a digital to analog converter) that takes the computer stuff (to use a technical term) and converts it into something the human ear can hear. The DACs that come with your computer and/or phone just aren’t good enough to take advantage of a higher quality stream. To do that, you need to bypass the internal DAC (via USB, for example) on your machine and run the signal through an external DAC (either a standalone or one that’s integrated into an AMP and/or receiver). I won’t go into too much detail about these products because then you’ll have nothing to study during your own midlife crisis. If you want an entry level way to try out the world of external DACs, get a Dragonfly thumbdrived-sized model, and see what you think. In the meantime…

4. If you’re listening to music out of your headphone jack and want a pair of headphones that can do the job for $100-$300, I’d focus almost all of your research on one factor: How do they feel? Don’t bother with anything more expensive than that unless you want to enter the remarkably confusing and ridiculously costly audiophile world. Not enough of you will do that (and even fewer can actually hear the difference), so Jay Z and Tidal will not win on sound. Here’s what they — or someone else — could win on…

5. Exclusive content and superior marketing. They got some of both of those with a relaunch that included the support of many massive artists. And the backing of those artists — such as Alicia Keys, Arcade Fire, Chris Martin , Daft Punk, Jack White, Kanye West, Deadmau5, Madonna, Nicki Minaj, Rihanna and Usher — is locked in because Jay Z gave them each a piece of the company. Don’t be distracted by any marketing about superior sound. This is the play. This is why Jay Z bought the company. And it’s a very smart move. But it’s not his only advantage…

6. He’s also got Beyonce. Seriously, if I had known that Beyonce was looking for a guy who was willing to blow a lot of investment cash on Internet startups, I would have given her a call a long time ago. For now, I’ll just give her husband some advice…

7. Sell the company. Now. You just created a lot of value by getting a lot of big name artists to sign onto this project. That was right in your wheelhouse. Competing on tech and features and UI is not. Take the value you created in the first few days of owning your company and flip the whole thing to one of the existing behemoths. The publicity and industry punch that Tidal brings is significant, and you’ll be paid well. And if you think music money is good, wait until you see Internet money. I know, I know. I’m in no position to give advice to a guy who married Beyonce. But consider this…

8. You just held a press conference with some of the biggest celebrities of our time. And the consumer buzz and press you got wasn’t even close to a Tim Cook Apple keynote. You’re in the technology business now. And we’re all in a new world. Today, product is a bigger star than any celebrity. That’s so important and so right, I’m gonna make it the chorus of this post and repeat it a couple more times. Product is a bigger star than any celebrity … Product is a bigger star than any celebrity. And in the high end tech business, we got 99 problems, but UI ain’t one. Seriously, if you think having a beef with another rapper is dangerous, try dealing with a product manager who disagrees with your vision. Here’s what the company that acquires Tidal should do to further differentiate itself…

9. Push back against the Internet-era dogma that we all hate having our music streams hosted by a human curator. That idea was never more than an assumption. And it’s one that needs to be tested. You’ll still have access to uninterrupted music when you want it. But when you want a radio station or a hosted playlist, then someone should let you hear a human voice. SiriusXM does that now, and I enjoy it. More importantly, my kids love it too. Technology is always better when it enhances the human element instead of erasing it. Yeah, I know. Number nine is a long way down a list to start dropping this kind of serious knowledge on you. But think of this as a concert that was building as it goes, until it gets called out for this encore…

10. Apple… Beats and Apple are set to release their competitor in the streaming music space and they have all the elements they need. The Beats business team, the Apple technical and user interace teams, and the friggin iPhone. So here’s what they should do to win soon and win big… Improve the DACs on their devices and make sure those DACs work especially well with their own streaming service and headphones (even if people don’t have an ear for music, it turns out that the placebo affect is huge), buy Tidal to get their artist deals (and the combined cred of Jay Z and Dr. Dre on one team), focus on the human element (DJs), let users be DJs and build their own audiences (no one ever grew up wanting to be a playlist maker), and combine it all with a video and live music offering on the soon to be dominant Apple TV. You go after Spotify, Vevo, SiriusXM (via Carplay) and even LiveNation, all in one massive move that could only be made by one massive company. And, as is the case with any decent music list, this one goes to…

11. Buy SiriusXM. Yeah, it’s crazy. But they have tens of millions of paying subscribers and they provide the fastest way to get into the cars of millions of Americans. Sure, it will all be replaced by Carplay, but that process will go a lot faster with a beachhead like Sirius. And there are two other big factors. First, you’d get Howard Stern. He is the best radio personality and interviewer in the world today and that’s not a bad anchor for all those podcasts that are being pushed through iTunes. And second, SiriusXM’s stock symbol is SIRI. It’s a match made in (Stairway to) Heaven.

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